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2018 (9) TMI 113 - KERALA HIGH COURTAllowable deduction u/s. 36(1) (v) r. w. Rules 104 or u/s. 37 - initial contribution to approved gratuity fund in respect of employees taken over; for the period they were employed with the previous employer, on the basis of contract of employment entered into at the time of take over - Held that:- Rule 104 comes in Part XIV of the Income Tax Rules, 1962 under the head “Approved Gratuity Funds” permitting any initial contribution made by an employer to a fund constituted even in respect of past services of an employee admitted to the benefits of a fund, to the extent of 81/3 % of the employee's salary for each year of his past service with the employer. The Assessing Officer and the appellate authorities seem to have laboured under the misapprehension that the words 'employed with the employer' would take in only the benefits accrued under a particular employer. The entire contributions paid by the appellant/assessee to the LIC as premium for the policy obtained for indemnification of the gratuity liability towards the employees even for the prior years, when the employees were in the employment of the Company taken over would be eligible for deduction under Section 36(1)(v). We answer the question of law in favour of the assessee and against the Revenue.
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